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Tuesday, April 05, 2016

The Future of Beer is Hiding in the Footnotes

For decades, folks in Denver have been tracking the growth of craft beer and the size of American craft breweries, and each year the Brewers Association releases figures on both. This has become an increasingly difficult exercise in recent years, however, because many of the flagship breweries making craft beer have changed their organizational structures to better compete in the marketplace. And that puts them outside the Brewers Association defintion. According to the revised definition, the Brewers Association says a craft brewery is "small, independent and traditional." (I'd have liked an Oxford comma in that definition, but that's a different debate for a different time.)

Craft beer is, tautologically, beer made by craft breweries. But 2015 was the year that brewing broke "craft beer." The once-elegant dichotomy between craft and noncraft, fraying at the edges since the formation of Craft Brewers Alliance, was shattered with brewery acquisitions, mergers, sales of minority stakes, and mission creep into non-beer products.

As usual, April heralds the annual Brewers Association list of largest breweries. The most startling element of this year's tally is how many breweries have a small letter appended after the name. Those footnotes connect to a description of the compromises and deviations from the pure essence of "craft brewing" each brewery has taken. (I'll include the entire, extremely long list in the first comment below this post.) In other words, these are in some sense all "crafty" breweries. And even with all those footnotes the BA elided some of the changes by failing to notice sales of
minority stakes--which I've addressed by adding an asterisk.

So, of the largest 25 breweries in the United States, how many unambiguously meet the definition of "craft?" Six.

Rk

Brewing Company

1

Anheuser-Busch, Inc (a)

2

MillerCoors (b)

3

Pabst Brewing Co (c)

4

D. G. Yuengling and Son

5

Boston Beer Co (d)

6

North American Breweries (e)

7

Sierra Nevada Brewing Co

8

New Belgium Brewing Co

9

Craft Brew Alliance (f)

10

Lagunitas Brewing Co (g)

11

Gambrinus (h)

12

Bell's Brewery, Inc (i)

13

Deschutes Brewery

14

Minhas Craft Brewery (j)

15

Stone Brewing Co

16

Sleeman Brewing Co (k)

17

Ballast Point (l)

18

Brooklyn Brewery

19

Firestone Walker (m)

20

Founders Brewing Co*

21

Oskar Blues Brewing (n)

22

Duvel Moortgat USA (o)

23

Dogfish Head Craft Brewery*

24

Matt Brewing Co (p)

25

SweetWater Brewing Co*

This is not a list of the largest American breweries, it's an obituary for "craft brewing." It demonstrates that a mature market is not one in which the big players are "small, independent and traditional." No amount of fiddling with the definition will ever repair this breach, either--because "craft beer" won. It has become mainstream and is in the process of entering the mass market. And companies that make hundreds of thousands of barrels of beer a year need to use all the advantages size affords. So of course "craft breweries" now look a lot like "macro breweries." The difference between the former craft and macro segments never had anything to do with beer, it had to do with size. The absurdity of a list that has to include a 300-word footnote to account for all the complexity in a market makes this reality explicit. We have entered the post-craft era; welcome to the future.

For me, nothing changes: it's always been more about the beer than it is about who makes it. This may be because I started drinking non-mainstream beer in 1981, and where I was, Pennsylvania, there were no microbreweries. There were beers, and breweries made them. When micros started, they were also breweries, and they made beer. I've argued this since 1998. I suppose I'm a stopped clock who's finally right. And will be wrong again tomorrow when "indie beer" becomes the next rallying cry. God help us.

This is not to disagree with your larger point suggesting that the market is not one in which the players are "small, independent and traditional" -- I think you're spot on with your conclusions as to the absurdity of this list. It's simply to point out that some of the footnotes don't take out breweries from the "small, independent & traditional" definition. I think the Bell's footnote merely suggests they have two "brands", as Upper Hand is a tiny brewery they started that brews beers sold exclusively on Michigan's Upper Peninsula and in far northern Wisconsin. Technically, they could have footnoted Stone Brewing, which produces the Arrogant Bastard brands as well as Stone brands.

This just begs that consumers learn the background and policies and processes of their favorite beer and breweries. This makes it no different than any other food category. Take bread for instance. There is no all encompassing term for local bakeries making good sandwich bread in a bag for sale in mainstream grocery stores. They're just "small" compared to Wonder. Same for my industry, cider. There are "local" producers in the PNW who use nearly identical ingredients (read: no Apple juice) as the big "macros", and there are others with just as shady business practices.

The sad thing is when business owners better option is to sell versus going to banks/private equity to fund their growth – they actually maintain more freedom as managers if they sell than to be an owner and have covenants to fulfill

I think you're wrong. If you buy something you should care about who makes it, and how that company treats its employees, the earth, competitors etc. There should be more to your decision in purchasing goods than just the quality of the end product.

Nat--I'd add that in brewing, the inverse is generally true, too. There are a few tricks big breweries can use like employing mash filters and high-gravity brewing, but they're still just making beer. At the beer level, perhaps more than with any other fermented beverage, beer is beer. It's industrial at a small scale, and it's industrial at a large scale. Even "nano" breweries make beer in 100-gallon batches.